Financial Highlights

M&M Financial Services posted a 3% year-on-year increase in standalone Profit After Tax (PAT) for the quarter ended June 30, reaching Rs 530.00 crore compared to Rs 513.00 crore in the same period last year. The company's loan book grew by 15% year-on-year, with total assets under management (AUM) rising to Rs 1,22,008.00 crore from Rs 1,06,339.00 crore in the previous year.

Total income for the quarter stood at Rs 4,438.00 crore, marking an 18% increase from Rs 3,760.00 crore in the corresponding quarter of the previous fiscal. The Net Interest Income (NII) also saw a healthy growth of 18%, reaching Rs 2,285.00 crore.

Asset Quality and Disbursements

The company's asset quality remained within its guided range, with Gross Stage 3 (GS3) assets at 3.8% and GS2+GS3 at 9.7%. The credit cost for the quarter was reported at 1.9%.

Disbursements for the quarter showed a marginal increase of 1% year-on-year, totaling Rs 12,808.00 crore. Notably, tractor disbursements grew by 21% compared to the same quarter last year.

Liquidity and Capital Adequacy

Mahindra Finance maintained a strong liquidity position with a buffer of over Rs 10,100.00 crore. The company's capital adequacy ratio stood at a healthy 20.6%, with Tier-1 capital at 17.9%.

Management Commentary

Raul Rebello, Managing Director & CEO of Mahindra Finance, stated, "We have started the fiscal year with a steady performance, maintaining our focus on sustainable growth and asset quality. The modest growth in disbursements, particularly in the tractor segment, reflects our strategic approach in current market conditions."

Senior Management Change

In a significant development, Mahindra Finance announced the appointment of Ms. Ketaki Suklikar as the new Chief Legal Officer, effective November 1. Ms. Suklikar, who brings over 20 years of legal experience, will replace Ms. Farida Balsara, who will transition back to Mahindra & Mahindra Limited.

Ms. Suklikar is currently the Legal Head of Mergers & Acquisitions at Mahindra Group. She will join Mahindra Finance as 'Chief Legal Officer – Designate' from September 1, to ensure a smooth transition.

Looking Ahead

As Mahindra Finance navigates through the fiscal year, the company remains committed to sustaining growth in its core vehicle finance portfolio while accelerating expansion across non-vehicle segments. With a focused push on MSME and LAP financing, continued digital transformation, and emphasis on enhancing customer experience, Mahindra Finance appears well-positioned for balanced and sustainable growth in the coming quarters.

The company's strategic initiatives and the new addition to its senior management team signal its intent to strengthen its market position and adapt to the evolving financial services landscape in India.

M&M Financial Services has reported a 3% year-on-year increase in net profit for the first quarter, driven by strong growth in its loan book and improved operational performance. However, the company also saw a rise in Stage-3 assets, indicating some challenges in asset quality.

Key Financial Highlights

• Net profit rose to Rs 530.00 crore in Q1, up from Rs 513.00 crore in the same period last year.
• Total income surged 18% to Rs 4,438.00 crore, compared to Rs 3,760.00 crore in Q1 of the previous year.
• The company's loan book (business assets) grew by 15% year-on-year to Rs 1,22,008.00 crore.
• Disbursements saw a modest 1% increase, reaching Rs 12,808.00 crore.

Asset Quality and Operational Metrics

M&M Financial Services reported mixed results in terms of asset quality:

• The combined Gross Stage 2 and 3 (GS2+GS3) assets were contained at 9.7%.
• Credit costs for the quarter were 1.9% of average total assets, up from 1.5% in the same quarter of the previous year.
• The company reported a healthy capital adequacy ratio of 20.6%, with Tier-1 capital at 17.9%.

Business Performance

M&M Financial Services continued to strengthen its position in various segments:

• Tractor financing saw significant growth, with disbursements increasing by 21% year-on-year.
• The company maintained its leadership in tractor financing and remained among the top five NBFCs for financing passenger vehicles, commercial vehicles, and other key segments.
• The non-vehicle finance portfolio grew by 30% year-on-year, contributing to asset base diversification.

Strategic Initiatives

The company highlighted several strategic moves during the quarter:

• Implementation of a product-led collections strategy with a focus on reducing high-risk portfolios.
• Enhancement of digitally enabled field operations and AI-driven early warning systems.
• Migration to a new Cloud-based Loan Management System (LMS) to improve operational efficiency.
• Establishment of two fully operational centralized processing centers for smoother customer experience.

Management Commentary

Raul Rebello, Managing Director & CEO, stated, "Our focus on sustaining growth in our core vehicle finance portfolio while accelerating expansion across non-vehicle segments has yielded positive results. With our continued digital transformation and emphasis on enhancing customer experience, we are well-positioned to drive balanced and sustainable growth."

Outlook

M&M Financial Services remains committed to maintaining its strong position in the vehicle finance market while expanding its presence in non-vehicle segments such as SME lending and leasing. The company's robust liquidity position, with a liquidity chest of over Rs 10,100.00 crore, provides financial flexibility to support future growth initiatives.

As M&M Financial Services continues to navigate the evolving financial landscape, its strategic focus on diversification, digital transformation, and customer-centric approach is expected to drive long-term value creation for stakeholders. However, the rise in Stage-3 assets suggests that the company may need to closely monitor and manage its asset quality in the coming quarters.